Norden has changed the weighting of dry bulk and tanker, which is now ”very strong” following a long decline. Sanctions against Russian oil will result in a new market boost, predicts CEO Jan Rindbo.
“The rates we see now is way stronger than what the market had expected,” says Norden CEO Jan Rindbo on the current tanker market. | Photo: NORDEN
After a miserable 2021 for produkt tanker, the recent weeks have provided ground for optimism.
Rates are increasing and at such a pace that tanker and dry bulk operator Norden recently upgraded its full-year guidance.
Lately, tendencies have looked very promising for tanker carriers, Norden Chief Executive Jan Rindbo tells WPO. And this after a 2021, which also in Norden’s case led to a large deficit in the now former and independent division Tanker Operator that lost USD 30m on the bottom line.
”It’s better than good. It’s very strong,” says the top exec on the current market.
It’s amazing to see that the product tanker market has now woken up as well
JAN RINDBO, CEO, NORDEN
”We come from rate levels of approximately USD 12-13,000 per day. And we now see rates across all regions above USD 30,000.”
Has moved tanker and dry bulk around
The outlook within tanker has made Norden change the weighting of its two core markets, dry bulk and tanker.
In the fourth quarter, Norden began taking more tanker vessels on charter and increase its spot market attention. At the same time, the carrier has acquired more tankers and benefited from high vessel values in dry bulk by divesting ships.
All due to an expectation of a ”gradual improvement in tanker,” in which the carrier now sees a larger ”upside” than within dry bulk, which for long has been the primary earnings source and continued to be so in Q1.
Norden’s first quarter
Despite the general expectation, the recent increases within tanker has been a surprise to the carrier, says Rindbo.
”The rates we see now is way stronger than what the market had expected,” he states, adding:
”It’s amazing to see that the product tanker market has now woken up as well. And actually, we now see a strong dry bulk and tanker market which is quite atypical in recent time.”
New sanctions will push the market upward
In its financial report, Norden writes that the war in Ukraine, sanctions against Russia, Covid disruptions and macroeconomic uncertainty are factors prompting continued insecurity and fluctuations on the freight markets.
For instance, if new sanctions are directed toward Russia, the effect is believed to ”slightly negative” for dry bulk, but ”positive” for tanker rates.
And a new round of sanctions may be around the corner. This week, the EU Commission proposed a new launch against the Russian economy via its sixth sanctions package, which sets the stage for a phase-out of Russian crude oil purchases within six months and refined oil products before the turn of the year.
This [the possible imports halt of Russian oil in the EU, -ed.] prompts a further upward pressure on the tanker markets
JAN RINDBO, CEO, NORDEN
Such a measure will be yet another factor pushing rates upward, according to Rindbo.
”This prompts a further upward pressure on the tanker markets,” says the top exec, adding:
”We have already seen oil prices soar, increasing energy prices. This entails that one has to pick up oil further away, meaning there will be a higher demand for product tanker vessels for the simple reason that ships now have to sail on longer routes, thus tied up for longer periods. This pulls a certain amount of capacity out of the market.”
Thursday, Norden presented its quarterly figures, revealing a profit of USD 117m. Last week, the carrier upgraded its full-year guidance and now expects a profit of USD 270-350m. The expectation includes a profit of USD 28m from already sold-off ships.
Rindbo doesn’t wish to say exactly how tanker and dry bulk contributed to the Q1 profit, and whether both delivered black numbers in the newly established business division Freight Services & Trading.
”What I can say is that the first quarter was driven by dry bulk,” he states instead.
English edit: Kristoffer Grønbæk
Norden lands first-quarter profit of USD 117m
